Paramount and Warner Bros. market $3 DVDs in China

Paramount has begun its foray into China with DVD sales and has joined forces …

Paramount has become the newest movie studio to make efforts to compete with pirates by offering low-cost, legitimate DVDs in China. New movie titles will go on sale some two months after their theater debut in the US, and for only $3. Paramount will also be joining forces with an unlikely partner in order to combat piracy: competitor Warner Bros., which already has outlets set up in China to sell DVDs.

Time Warner (parent company to Warner Bros.) was the first to try to undercut Chinese movie pirates by selling cheap DVDs in mid-2006. It formed Warner China as a partnership between Warner Bros., China Film Group, and Hengdian Group to sell movies just days after theatrical release for rock-bottom prices: just 10 to 12 yuan (between $1.30 and $1.60). Warner was followed by Fox a few months later, which planned to mirror that strategy but at a higher price—about 20 to 25 yuan, which translates to about $3.

The problem with $3 is that it's more than double the typical price for illicit street copies of the same movies. But Warner Bros. and Paramount, like Fox, hope that the premium won't deter customers from buying if they know it's a real, legal version. As Fox's international home-entertainment manager Keith Feldman said last November, "It comes down to our ability as marketers to convince the Chinese consumer it's worth spending the money."

Both Warner Bros. and Paramount say that this will be the earliest release date and lowest price that their movies have ever been sold for, worldwide. And their reason for teaming up with one another is strategic: they are competing against piracy in China, not each other. The more legit movies that are available in one spot, the more attractive the outlets will become to prospective buyers. "We're committed to developing a legitimate market in China, and having two more Hollywood studios gives us more critical mass," Warner Bros. managing director of China distribution, Tony Vaughan, said in a news conference, according to the Associated Press.

Whatever the price, the studios have come to realize that without affordable offerings in China, they won't make any sales, period. Even just selling a few thousand movies at $3 per disc will be better than nothing. Plus, it helps the studios bolster movie sales numbers, which will be equally important to them while DVD sales in the West continue to go flat.